APICORP And Bahri To Launch US$1.5 Billion Shipping Fund for the acquisition of 15 VLCCs

The Arab Petroleum Investments Corporation (APICORP) and The National Shipping Company of Saudi Arabia (Bahri) announced the launch of a landmark shipping fund.

An agreement to establish the APICORP Bahri Oil Shipping Fund (ABOSF) between APICORP and Bahri was formally signed at a ceremony held on July 17 in Riyadh, in the presence of His Excellency Khalid Al-Falih, Minister of Energy, Industry and Mineral Resources for the Kingdom of Saudi Arabia and Chairman of Saudi Aramco. The ceremony was attended by Dr. Aabed Bin Abdulla Al Saadoun, Chairman of APICORP, Abdulrahman Mohammed Al Mofadhi, Chairman of Bahri, Dr. Raed Al Rayes, Deputy CEO & General Manager of APICORP, Ibrahim Al Omar, CEO of Bahri and Naser Al-Abdulkareem President of Bahri Oil Transportation. Other senior officials and advisers from both organizations were also present.

Image for representative purposes only - Photo courtesy: Bahri

The Fund’s target is to acquire approximately 15 Very Large Crude Carriers (VLCCs) over three phases with total investments of up to $1.5 billion composed of debt and equity. APICORP will be the main investor and fund manager, whilst Bahri will be the exclusive commercial and technical manager. APICORP will invest 85% in the Fund with Bahri investing the remaining 15%. The Fund will be a closed-end fund with a 10 years life period, and will deliver returns derived from the commercial employment of the VLCCs.

Dr. Aabed Bin Abdulla Al Saadoun, Chairman of APICORP said: “We are delighted to be launching this fund in partnership with an esteemed organization like Bahri, a leader in the shipping industry. APICORP continues to support the transformation of the energy industry and seek to raise the profile, both locally and internationally, of the sector through such investments."

Abdulrahman Mohammed Al Mofadhi, Chairman of Bahri said, “Bahri is committed to upholding its leadership position in the Kingdom of Saudi Arabia and the establishment of this fund in partnership with an extremely well-entrenched financial institution such as APICORP, is another step in that direction. This fund will not only reduce Saudi Arabia’s dependence on external crude carriers but also its earnings will be reinvested in the local economy. As with any other initiative, our growth strategy for this investment, firmly falls in line with Saudi Arabia’s plans for future development as laid out in the Kingdom’s Vision 2030.”

This agreement is in line with Saudi Arabia’s long term economic diversification plan, support economic growth and creating employment opportunities. The project is a step in the right direction to enhance maritime sector awareness and augment growth of this industry in the country. APICORP and Bahri have developed a unique structure that assists Bahri in increasing its VLCC fleet. This will also make Bahri the biggest VLCCs operator in the international VLCC market segment.

Dr. Raed Al Rayes, Deputy CEO & General Manager of APICORP commented: “The launch of this fund is a further example of APICORP's unrivalled ability to provide innovative financing solutions that meet the demands of the energy sector. A mechanism such as this not only helps the energy industry to meet the logistical challenges presented by the current dynamics, but also has the potential to deliver attractive returns."

Ibrahim Al Omar, CEO of Bahri said: “At Bahri we remain steadfast in our efforts to contribute to our national vision and goals, and are committed to playing an integral role in further developing and transforming the maritime industry in the Kingdom to strengthen its position as a leading regional logistics hub, thereby creating more employment opportunities for Saudis while continuing to play our part in the economic development of Saudi Arabia. With a current fleet of 36 VLCC’s and 10 new build orders scheduled for delivery in 2017-18, the 15 crude carriers proposed for acquisition under this fund will propel Bahri into becoming the largest operator of VLCC’s in the world.”

Dr. Al Rayes continued: "This fund is APICORP’s second shipping fund. The first shipping fund, APICORP Petroleum Shipping Fund (APSF), was launched as a five year closed-end fund in February 2013 and till today yields attractive returns by leveraging growth opportunities in the petroleum products tanker charter market. The Fund we are launching today will capture a unique opportunity thrown open by the recent changes in the maritime oil logistics market of the region.”

Dr. Al Rayes concluded: "On behalf of APICORP, I would like to thank the Ministry of Energy, Industry and Mineral Resources and His Excellency Khalid Al-Falih for their support, without which this Fund would not have been possible.”